Hello! 

I am new to this forum, but I have decided to make an account in order to, hopefully,  gain some clarity on the topic of Revenue Sharing.

Recent, I have been offered a position at an indie game company as a Co-Writer on their RPG project. Everything about the position looks good and I can't wait to begin working with them.

However, their budget is limited so they have offered me compensation with a fixed price plus revenue sharing. They then proceeded to ask me what amount would be fair. 

The biggest problem right now is that I have a limited understanding of how this process works, as this is my first jump into this type of field. I have been a long-time freelance writer, but this is foreign territory for me.

My question(s) is: How do I know how much I should ask for? How does Revenue Sharing work? What is a fair fixed-price + Revenue sharing model? Finally, are there any references that I can utilize after this?

I want to go into this process with as much information as possible, so I seriously appreciate the help. I apologize if this comes across strangely worded. I'm having a hard time putting my thoughts to words right now.

Thank you in advance.

9 minutes ago, Raze23 said:

How does Revenue Sharing work?

In general, truthfully? Very poorly or not at all.  Expect the amount of revenue shared with you to be close to zero.  As a model, revenue share is often offered by less experienced developers who are less likely to successfully complete, release, and market a game.

However, you're also getting a fixed payment, so revenue share as an added bonus is nice to have, especially if the developer has a good track record of successful releases. I would negotiate for the highest fixed payment you are able to get, and treat potential revenue share as a nice bonus that may not actually eventuate - that is to say, that if you had the option to do so it would likely be better financially to trade your revenue share for an increased fixed payment.

Whatever you agree to, make sure you've got it in writing. 

Welcome to the forums!

How "Rev Share" usually works is that each member depending on their deal is provided a % of the income the game generates. Depending on your agreement this might be NET or GROSS. If the developer understands how finances work they will usually never provide a rev share deal based off GROSS earnings.

You're not going to be asking for a dollar amount in such a deal, you should ask for a % and that % should be paid in perpetuity. Make sure you get everything in writing and signed, and make sure you have your payment terms clearly defined. I would suggest having a lawyer review the draft if you're new to this.

Negotiating your amount depends on a lot of factors. How much negotiating power do you have? How many other people are asking for a % of NET earnings? As you're the Co-Writer, how much are you contributing to the project in comparison to other writers? What value do you put on your contribution to the overall success of the project?

Nobody can give you consulting on what to ask for because we don't know anything about the project and the parties involved. I would suggest taking a higher salary and a lower % as opposed to lower salary and high % unless this studio has a track record, or the team has people with industry experience developing commercial titles. People can sometimes under estimate their true costs to acquire a sale, which can leave a company with a negative net profit regardless of high gross revenues, and that is if the game sells at all...

In my experience, revenue sharing isn't really standardised at all. In the worst case people promise it without even creating the legal framework required. Typically in my experience, new independent studios will split equity (ownership of the company) between the workers... 

Traditionally, royalty payments occurred between a game's publisher and the development company (instead of the development company and its staff). In this traditional model it was extremely common for not a single cent of royalties to be paid out though -- the contracts would usually stipulate that the publisher's costs would be paid off first... And seeing they're hiring themselves to market the game, they can charge themselves whatever they like for their own work. e.g. They can say that their marketing services that bought $10k worth of advertising space were valued at $10M... So even though your game made $1M in revenue, you actually cost them $9M and they're not paying you a cent in royalties.

Fun...

So, read the actual contract to see if it's actually worth any money at all, or if it's just theoretical. Make sure there actually is a contract, a properly registered company, a framework for how royalties will be paid, and what the tax implications are. If they can't explain how their payments are going to work to you, then they're putting the cart before the horse. 

As for a fair percentage... I don't think you can come up with than in isolation. A fair method would be to add up the amount of work done by each team member and give everyone a slice of the revenue that's comparable to their slice of the work... 

e.g. If there's one artist and one programmer, you should get a bigger slice than if there's 50 artists...

That said, most games make like $100 in total revenue, so don't put tooo much stock in a rev share promise if you actually need that money to live off. 

Thank you all for the quick replies. I will ask about how payments are made and the contract itself.

My next(hopefully last) question is about the fixed amount. As I am being asked directly, what is a good amount to ask for exactly? I know for certain that there is one other dedicated writer besides myself. Up until now, the whole team had been pitching in to help with the narration, but only one was really working on it. I'm being hired to work directly on the main narration and am expected to be the one primarily focused on it once I begin.

I understand that there are a huge amount of variables at play here. I am just trying to get a general understanding before I begin negotiations.

Thanks in advance.

Honestly, it's hard to even give a ballpark idea without knowing a lot of details about the team and project.  At this stage we don't know if this is a well run hobby or an actual business, how many people are involved, how important narrative actually is to the project, etc.

You can probably get some ideas by searching for guides to setting reasonable freelance rates to get an idea of factors to be considered.  If you have an idea of what the other writer is being paid you might judge your own pitch relative to that.

Think about how much time and effort you're likely to be putting in to the project, and what you think might be a reasonable compensation for that time. Think about whether your contract allows for additional payment if there is more work than you expected.

Do you need the job to pay your bills?  If so, you'll need to figure out a sufficient amount, ideally with an added buffer in case you don't find the next job immediately. If it's more of a side project you might accept a lower amount for the experience - but I would still suggest trying to value yourself fairly.

3 minutes ago, Raze23 said:

Thank you all for the quick replies. I will ask about how payments are made and the contract itself.

My next(hopefully last) question is about the fixed amount. As I am being asked directly, what is a good amount to ask for exactly? I know for certain that there is one other dedicated writer besides myself. Up until now, the whole team had been pitching in to help with the narration, but only one was really working on it.

I understand that there are a huge amount of variables at play here. I am just trying to get a general understanding before I begin negotiations.

Thanks in advance.

Freelance writers I've personally worked with bill by the word. However there are freelancers that bill hourly, and by the project. How much you charge can greatly depend on your customer as well... and what you're writing.  

Maybe someone else can offer more insight to billing as I'm not a freelance writer myself, I've only hired them.

1 minute ago, Rutin said:

Freelance writers I've personally worked with bill by the word.

This matches my experience as well. Rates per word vary hugely depending on a range of factors.

I apologize for the vague information about the game in question so I will give a little more information in hopes of some clarity:

For certain, the game will be released as there is currently an existing and playable demo that is available to the public. It might be getting significant backing from a larger publisher in the future, and is currently using Kickstarter to obtain additional funds to assist with development. The game is also set to release on Steam next year. That said, I also know that they are currently tight on a budget, though I am not currently certain how to account for that when asking for a starting price. 

Once more, I apologize for my ignorance on this subject matter, as I do not know how much the above information is even relevant to this topic. 

Thanks again for the informational replies.

15 minutes ago, Raze23 said:

I apologize for the vague information about the game in question so I will give a little more information in hopes of some clarity:

For certain, the game will be released as there is currently an existing and playable demo that is available to the public. It might be getting significant backing from a larger publisher in the future, and is currently using Kickstarter to obtain additional funds to assist with development. The game is also set to release on Steam next year. That said, I also know that they are currently tight on a budget, though I am not currently certain how to account for that when asking for a starting price. 

Once more, I apologize for my ignorance on this subject matter, as I do not know how much the above information is even relevant to this topic. 

Thanks again for the informational replies.

No worries.   I'm not sure how many gigs you've done prior to this, but I personally make it a habit to keep a certain amount I'm willing to go no lower than on services I provide, then pass up deals that are not in my range in most cases. You gotta put value in what you do otherwise nobody else will. Don't be afraid to walk away from a gig if it's not what you want, it most likely isn't life changing money.

Apart from the IT industry, I run a legal services business and I get calls all the time from contractors that took bad deals, and didn't even get paid... They knew the company had a cash flow problem before starting and still went along, and even gave them a break on pricing but still got screwed.

My advice is to calculate the amount you're happy with working at per word, then pass on that number and see where it goes. At the end of the day it doesn't matter if you charge an industry low or high if the company cannot pay you. Make sure you set terms as well and if they miss one payment I would suggest demanding a deposit that you'll hold on account.